Day 2: i-Gaming conference call

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In the words of one attendee, being here at the European i-gaming conference is like being at the reading of a will of a late-lamented family member.

“We’ve all just discovered that the family member, who we all thought was very rich, has left less money than we thought and we are now deciding what to do with the spoils. One thinks we should use the money this way, another thinks another way.”

Online gambling may be a long way from ordering the hearse, but while gaming companies are still alive, they are not exactly kicking. The problem, as with all such conferences, is that much of the chat involves the converted preaching to the converted. The “them and us” atmosphere of the opening day on Wednesday still permeates – with “they” being conspicuous by not having been invited.

However, we were treated to the amusing spectacle this morning of an adviser to a European government trying to explain the merits of a state monopoly to keep out internet gambling companies.

All very timely, given that EU commissioner Charlie McCreevey on Wednesday stepped up the pressure on member states protecting state monopolies, demanding information from Austria, France and Italy on why they are restricting gambling services through national legislation.

Rolf Sims, legal adviser to the Norwegian government, played it as straight as only a Norwegian legal adviser could. “Gaming is not a regular activity and deserves special attention,” he told a somewhat stunned audience in his deadpan tone. “We believe the monopoly model will ensure the possibility of regulating a domestic market and maintain a moderate gaming market.”

Mr Sims is a regular at these conferences, he continued. Two years ago, he heard one delegate describe state monopolies as incompetent, old-fashioned and outdated. “I don’t agree with that – they do a good job. The only intention of a monopoly is to prevent a competitive market and act as a brake and restraint on the market.”

There was more. The position of the political elite of Norway – which, incidentally, has the third highest gaming spend per capita in the world – was being undermined by a growing foreign market targeting Norway on the internet.

“From Norway’s point of view, the monopoly model is the most efficient form of gaming,” Mr Sims said.

This was all too much for Douglas Roos, chief executive of Ladbroke‘s Nordic arm, Sponsio, and the emotional antithesis of Mr Sims. Invoking the US Prohibiiton of the 1920s and 30s, he went straight to the heart of the issue.

“Are we supposed to sit here in 2006 and discuss whether we should really prohibit something when there is a huge population who want to gamble, because people can’t decide it for themselves?” he asked.

Why, he demanded to know, could a company of 120 years’ standing like Ladbrokes not be allowed to observe the same social responsibilities towards gambling as Norway’s state monopoly, Norsk Tipping?

Fortunately (depending on your point of view), Reidar Nordby, Norsk Tipping’s chief executive, was on hand to answer.

Of course Ladbrokes is a serious company, he replied, but it is a UK-based company and the difficulty arose when companies crossed borders into other jurisdictions.

Look at the video and lottery terminals market in Norway, he said. Ten years ago, it was generating NKr4.5bn a year. Now it is close to NKr30bn ($4.5bn), of which Norsk Tipping takes one-third. The Norwegian government’s response? Close it down.

The attitude of the private sector was to try to maximise its online gambling markets, said Mr Nordby. If the operators had acted responsibly, things might have been different, he said. “But greediness has allowed this to happen.”

Caught in this collision of opposites, Mark Harris, chief executive of the UK’s National Lottery Commission and moderator of this none-too-comfortable debate, begged to ask whether compromise rather than years of legal disputes would win out.

Mr Sims came clean, saying he believed some pan-European jurisdiction on online gambling would help. But the mood of this conference is grim, and after the debacle in the US there is little appetite here for giving ground.

Meanwhile, Mr McCreevey has issued his demands. The stage is set for further confrontation.

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